The Bank of Japan¡¯s wait-and-see approach is being stress-tested live as bonds fall and the yen remains weak, even after intervention, with some analysts wondering whether the cool approach to interest rate increases on the part of the monetary authorities might be feeding into the problem.
¡°I believe long-term interest rates are rising partly because of concerns that the BOJ is falling behind the curve, as inflation might accelerate,¡± said Shinichiro Kobayashi, chief economist at Mitsubishi UFJ Research & Consulting.
Economic uncertainty and soaring crude oil prices fueled by the Middle East conflict have stoked global inflation fears, driving a flight to the dollar, analysts said. The yen is now trading back at ?159 to the dollar, after being forced down into the ?155 range, and is again near the point that could force action by the government once again.
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